EGG Scan for June 3rd

Mix up in the reporting of the ISM manufacturing data sets unsettled tone for the broad markets. The mixed reviews kept the markets in check despite headlines stating we hit new highs on the S&P and Dow. Remain cautious here as the markets deal with the move higher from last week.

Running the EGG Scans – First the daily winners…

  • UGAZ – natural gas is back on the upside. We added this trade in the models and still like the upside short term. FCG didn’t react the same watch this divergence.
  • DUST – gold miners moving lower again as gold continues to test lower.
  • DSLV & GLL – silver is joining gold on the downside and the short funds are heading higher.
  • SOXL – semiconductors are continuing to move higher and leading technology higher.
  • YINN – China is back on the list as it has put together a solid upside mover the last two weeks. The challenge remains believability.

Monday’s winners are still showing trends that are tradable, but they bring with them risk as well. The precious metals, commodities and global markets are moving in opposite directions, but their respective ETFs are posting solid gains.

Technology is still the driver on the upside, but it was a challenging day with the intraday volatility created by the misreporting of the economic data. Taking it slowly for now and willing to be patient as we gain some clarity in direction.

EGG Model Watch List:

EGG setup going forward…

  1. ERX – Energy is rising again and follow through today would be positive entry point for the sector ETF. Entry $111.25. max entry $112. Target $118. Stop $110. (HIT The entry point on Friday) — Hit stop Monday with the intraday volatility.
  2. PJP – Pharma (breaking from consolidation, but momentum has stalled.) entry $58.75, stop $58. Another gap open with a $59 entry point and adding to the risk of the trade. Still interesting move, but needs a follow through on test of the move. $59.45 entry. still attempting to follow through on the upside.
  3. BRCM – giving the best look relative to the semiconductors leadership. $31.15 entry on Wednesday was optimal looking back. Thus, a test of that level and hold, or a move through $31.50 on volume would be of interest for a EGG trade on individual stock level. Got the early move on Thursday (entry $31.50) and it followed through on Friday. Stop $31.15. News pushed the stock up 12% on Monday at the open. Sold half at $35 and $34 stop on the balance. See how this plays out… the news wasn’t that earth shattering and willing to take my gift of gains.
  4. Off the beaten path and buried in our scans is the movement in the cloud computing stocks (SKYY). The reversal off the low is of interest and the acceleration last week was positive. It has not shown up on our normal scans as the momentum does meet the criteria. However, our bottom fishing scans has picked this up fro the last week. tested the move on Friday and Monday, but scanning the parts is worth a look as well. One stock to watch here is EMC. Testing the move above $26.45 and a move above $26.80 is of interest for a upside trade, if the sector continues to he upside move.

Current EGG:

QLD hit the stop posted based on the intraday response to the misreport of the ISM manufacturing number. Not the way you want to see an exit develop as it reversed to move higher on the corrected data. We can’t cry over spilled milk, but it does not make you happy. Played out well in the end despite the shaky start. Recommended selling part (sold 1/2 at $106). The stop remains at $106 was hit intraday on Monday and we are out of the position with a solid gain and looking forward.